Question regarding utilizing the EAD along with H1B

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chatakondu

Registered Users (C)
Hi,
Can anyone help with these questions?

Friend of mine asking me to start a company with EAD status as a co-founder. But company is not in a position to continue/transfer my rest of the green process or not in a position to sponsor H1-B visa well. I know I can transfer to another company after 6 months of receiving EAD.

1) What are the legal problems if I continue to work with current employer with H1-B and utilize the EAD for new company? I am not sure I can do that. Any help would be appreciated. I will certainly do take some legal help before I proceed further, but in the mean time if I hear some experts help that would be great.
2) New company will not be able to give any salary at this point. Compensation will be in terms of equity only. Is that recommended during this stage?

Ultimately I do not want to disturb my green card process and relationship with my employer is very good.

Regards,
Chatakondu
 
This Q was answered many times already.
Your H-1 becomes invalid since the day you start using your EAD.
If you decide to do it, you must go to your employer (H-1) and switch there from H-1 to EAD by filling some form (I-9?). Then you can use EAD for multiple jobs, for the company and former H-1 employer, at same time.
 
Compass, thanks for the reply.

That part I am clear. All I am worried is, can I have stake in the company? I am pretty sure with H1-B status person cannot have more than 5% stake in the company.

With EAD, are there any restrictions like that. Friend of mine hinted, if company is registerd as LLC you should be fine. For S-Corp company he was sure I should not be as co-founder. But the company I am talking is C-Corp company.
If the company is paying salary, I know I can have n number of paychecks. This case no paycheck or anything. It is just only stake. It is almost as good as owning the company. Is it allowed during the EAD stage?

Appreciate anyones help..
 
chatakondu said:
All I am worried is, can I have stake in the company? I am pretty sure with H1-B status person cannot have more than 5% stake in the company.
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Sure, but you're not going to be in H-1 status. And on the EAD there is no restriction on ownership, since the company will not be giving you any immigration status or benefits.

You should be fine. The only question is whether a non-Permanent Resident can be a shareholder in an S-corp. The regulations take about residency, and I'm pretty sure they mean tax residency but you may want to double-check with a CPA.
 
compass said:
Your H-1 becomes invalid since the day you start using your EAD.
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Then why does the Cronin Memo dated 05-16-2000 say this ?

"..an H-1 or L-1 nonimmigrant will violate his/her nonimmigrant status if s/he uses the EAD to leave the employer listed on the approved I-129 petition and engage in employment for a separate employer"

Doesn't it imply that as long as you work for your H1B sponsoring employer, your H1B is in good shape?
 
If you leave your current employer (H1-B sponsor), of course you are violating your non-immigrant status, meaning your H-1B will be invalid immediately.

If you keep working for current employer, you can't work for any other employer, unless you have another H-1B for that employer (or transfer your curent H-1B to that employer), or use EAD. However, using EAD will immediatelly put you in immigrant status, so all your H-1B status will be invalid.

Back to Chatakondu's original question, I believe you can use EAD for any other job, but the new job must be in the same area, for a similar position.

This is the best I know. It may be wrong. Better to consult your attorney.
 
TheRealCanadian said:
You should be fine. The only question is whether a non-Permanent Resident can be a shareholder in an S-corp. The regulations take about residency, and I'm pretty sure they mean tax residency but you may want to double-check with a CPA.
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You have to be a U.S. Citizen to be a shareholder in an S-Corporation.

For more information, read this article or visit irs.gov
 
indianimmi said:
The original poster is referring on C-Corp not S-Corp. Please provide informations regarding C-Corp.
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There are no restrictions as to who can own shares in a C-Corporation. Residency does not matter. However if you are also considered an employee, you need to satisfy Employment regulations, i.e. you must be authorized to work.
 
TheRealCanadian said:
Wrong. You cannot be a non-resident alien. I believe that means that non-immigrants who meet SPT can qualify.

See here:

http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00001361----000-.html
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I don't think anyone here said that non-resident aliens can be shareholders in an S- Corp. It also does not say anything about SPT in the IRS code.

A more safer option would be to ask the IRS themselves. Having said that the OP has clarified that his question is regards to a C- Corp.
 
mikeliu88 said:
If you keep working for current employer, you can't work for any other employer, unless you have another H-1B for that employer (or transfer your curent H-1B to that employer), or use EAD. However, using EAD will immediatelly put you in immigrant status, so all your H-1B status will be invalid.
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I am unable to agree with the above statement as H1-B is dual intent.

I saw the follwing in Murthy Chat.

Chat User : Murthji, can a person in H1B status and with EAD approval start a business or do second job while continuing work for the current sponsoring employer?

Attorney Murthy : Yes, a person with an EAD is allowed to work at another part-time job or start a business, etc, as long as s/he can continue to work either for the GC-sponsoring employer or after AC21 portability eligibility, s/he can work for another employer in the same or similar field, as allowed by AC21.
 
asPapi said:
I don't think anyone here said that non-resident aliens can be shareholders in an S- Corp. It also does not say anything about SPT in the IRS code.
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I didn't say that. You said that one needed to be a US citizen, which is incorrect. When you look at the law, the only person it prohibits are non-resident aliens. Once you are a tax resident (by meeting SPT or becoming a PR), you can be a shareholder in an S-corp.
 
Thank you all for your responses. Appreciate your help and concern.

I would like to quickly update what my lawyer suggested:
She said try not doing that. It defeats the purpose of LC (Labor Certification) process (Applied with special skill set). Instead she suggested use your wife name/EAD to open a business or start a company. She has been dependent and applied EAD with dependent status. So, technically my wife does not have LC and/or no skills specified while applying for green card.

That was my lawyer suggestion and her ultimate goal was not disturb the GC process as well. She is not the company lawyer. I hired for my GC separately.

So, I decided to drop out joining in founding team.
 
I agree with Dumbledore!

I agree with Dumbledore and attorney Murthy. This should clarify the OP's question.

As long as you work for your H1B/GC sponsor full-time, there is absolutely no problem to be working part-time on EAD in any profession (the part-time hours must not conflict with the full-time hours of your H1B/GC sponsor) and invest in any business only as an 'investor' (you must be able to prove that you are involved in putting any man-hours into the business or in any work).

In the above situation, YOU WILL NOT LOOSE YOUR H1B STATUS!!

My attorney supports this and I am sure any attorney [not employer (white) attorneys who suck and treat immigrants as slaves and do not wish them to prosper in comparison to the American citizens (whites)] should be able to support this situation if at all USCIS attempts to drag an immigrant in this situation to court.

I would like TheRealCanadian and others to respond to this or dispute this analysis. - IE

Dumbledore said:
I am unable to agree with the above statement as H1-B is dual intent.

I saw the follwing in Murthy Chat.

Chat User : Murthji, can a person in H1B status and with EAD approval start a business or do second job while continuing work for the current sponsoring employer?

Attorney Murthy : Yes, a person with an EAD is allowed to work at another part-time job or start a business, etc, as long as s/he can continue to work either for the GC-sponsoring employer or after AC21 portability eligibility, s/he can work for another employer in the same or similar field, as allowed by AC21.
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You can become an investor, or an owner, of a new company without violating your existing H1 status.

However, if you want to work for that company, you need to have either EAD, or another H1B (with or without using AC-21), in order to establish an employer/employee relationship.

The minute you start using EAD for any job, your H1 status is voided.

You may resume your H1 status once you stop using EAD, thanks to "dual intent" of the H and L visa category.

Murthy's answer was correct, but I think she meant "to continue your employment-based immigration process" rather than "to maintain valid H1 status"

Don't know much about S- or C- corporation stuff, better contact a CPA in my opinion.
 
Imm_Exploited said:
I would like TheRealCanadian and others to respond to this or dispute this analysis. - IE
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It's important to note that the quote from Murthy is completely silent as to retaining or losing H-1B status. She is absolutely correct in stating that an H-1B alien with an EAD can take a part-time job or start a business.

There's nothing in the quote to support the assertion that the alien would be able to retain H-1B status while doing something not permitted by the H-1B petition.
 
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